Weak Connexion flusters Boeing

When Boeing Chief Executive Phil Condit talks about the future of his aerospace company, he invariably mentions his high hopes for a much-touted program called Connexion by Boeing.

Connexion is the undisputed leader in aircraft-to-ground communication technology for airline passengers. Using satellites and sophisticated software, it gives travelers the same fast access to the Internet as broadband customers have on the ground.

Condit uses it on his Boeing Co. plane. Vice President Dick Cheney's airplane has it.

Problem is, no U.S. airlines have signed up for the innovative package.

Instead, they are eyeing a less expensive, less robust offering from Tenzing Communications Inc. in Seattle, a 5-year-old company partly owned by Boeing rival Airbus.

"We're about here and now, taking advantage of what's available, and then scaling up," said Tenzing CEO Alan McGinnis.

In an environment where airlines are trimming in-flight amenities and counting every cent they spend to stay afloat, Tenzing appears to have the right strategic formula.

Although Tenzing's basic e-mail offerings are anemic compared with Boeing's full-scale Internet package, the airlines like Tenzing's approach. Its e-mail offering currently flies on 44 aircraft at Cathay Pacific Airways, another Tenzing investor.

Tenzing also has text-messaging service on five Virgin Atlantic Airways jets, with plans to be on 14 Virgin planes by the end of the year.

Boeing's high-performing Connexion package has had less success. It is aboard only two commercial jetliners worldwide, one at Lufthansa and one at British Airways, both for trial runs. Japan Airlines and Scandinavian Airlines System each have announced plans to equip at least 10 of their jets with Connexion.

Boeing and Tenzing say they are on the verge of inking more deals.

Tenzing is working with Verizon Airfone Inc., which offers telephone and other services on some 2,000 passenger jets nationwide, to include its e-mail offering on those planes.

Verizon works with Chicago-based Boeing as well but says Connexion is "just too costly at this point" for Verizon's airline customers.

"The airlines are in survival mode and don't have the time and wherewithal to be distracted too much," said Verizon Airfone President Bill Pallone.

Connexion takes longer and costs more to install, giving Tenzing the upper hand. But, Pallone said, "there's a market for each, given that airlines come back."

Indeed, if the terrorist attacks of Sept. 11, 2001, had not devastated the domestic airline industry, Connexion would have led Tenzing into the market.

Those airlines pulled out of the program within four months of the terrorist attacks, said Scott Carson, president of Connexion by Boeing. His group remains in close contact with the airlines, but he said it is unclear when they will be ready for Connexion.

"It depends on how long the economic distress lasts," Carson said.

He praised Tenzing for "helping us verify that people wanted this kind of service." But "as good as it has been at warming the market and creating passenger awareness and pull, it is so limited in terms of where it can grow to," Carson said.

Passenger pricing is fluctuating, given how few airlines offer either service, but each company makes arguments that its service is a better value for passengers.

A big question is whether Connexion is a value for Boeing, said Brendan Gallagher, editor of Inflight magazine, which covers air entertainment and communications issues.

"Connexion, from a technology point of view, is absolutely dazzling," Gallagher said. "But we know nothing about what it has cost Boeing to carry the project this far and nothing about its business proposition."

Condit sidesteps questions about when he expects Connexion to take off and will not discuss details of its financial plan.

"The business plan is still for a very strong positive return on investment," he said after Boeing's annual meeting Monday. "I continue to be very encouraged about where it's going."